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Wednesday, August 9, 2017

GOP debates tax cuts vs. tax reform

Republicans are looking for fast action on tax cuts after burning up President Trump's first 200 days in office without any major legislative accomplishments.

The problem? Lawmakers remain divided over how to move forward with tax reform, and have yet to pass a budget that would unlock a fast-track process for preventing Democrats from filibustering their legislation.

The stakes for the GOP are enormous.

Trump's approval rating is at a record low for this stage of a presidency, and GOP lawmakers face pressure to score a big win before the 2018 midterm elections.

"It's critical," said Republican strategist Vin Weber. We're in danger of the notion that Republicans can't govern the country being set in people's minds and becoming very difficult to dislodge.

"Action before the end of the year, that's the time I would use, seems to me to be really, really important," he added.

The biggest problem for Republicans is agreeing on the scope of their potential tax package.

An increasing number of Republicans want to scale back the goal of comprehensive tax reform in favor of the narrower goal of tax cuts.

They want to find what is readily achievable and move forward quickly, before it becomes more difficult to pass legislation in a mid-term election year.

GOP lawmakers fear losing momentum by becoming bogged down in a complex and controversial negotiation over closing tax credits and loopholes, which would draw pushback from various special interests.

"I would like to set a goal of trying to get done as soon as we can and by then would be a good goal," Sen. Mike Crapo (R-Idaho), a senior member of the Finance Committee, said of the Thanksgiving timeline.

"It's a desire to get as much work as we can in before the year ends," he added.

Former Speaker Newt Gingrich has made this argument in public and in private meetings with GOP lawmakers.

"If you're going to get them done they got to be done about that time because you then get into some very perilous times after that and a lot of slowdowns after that," Hatch told The Hill of a November timeline.

Not everyone is ready to move on from tax reform, however.

Speaker Paul Ryan (R-Wis.) backs a comprehensive restructuring of the tax code, as does the White House.

Ryan promoted tax reform promoted tax reform at a town hall meeting in Burlington, Wis., on Friday, setting a fall timeline for action.

"We're not going to allow the setback in the Senate on health care to knock us off track with our plans for tax reform in the fall," he told constituents.

Some members of the Senate Finance Committee also want a more ambitious tax reform package - something Congress hasn't passed since 1986.

Sen. John Thune (R-S.D.), a member of Finance, argued that some more ambitious changes need to be considered, such as a moving to a territorial system that would not tax corporate profits earned overseas.

"An issue that has favor of some of our members is doing something smaller, just an individual rate cut and push the other stuff until later but I don't think we want to give up on comprehensive," Thune said.

"My goal is to do a big bold reform bill. I know there are some advocates out there for just doing something small and kind of incremental but that doesn't solve most of our problems," he said.

Republicans also must get a budget passed to move to tax reform.

House Republicans have been divided over the budget, and were unable to agree to a measure before leaving for recess. The Senate also has yet to do a budget.

Republicans need a blueprint for tax reform because it would allow them to pass tax legislation through the Senate on a majority vote, preventing a Democratic filibuster. Republicans used the same rules in their failed effort to pass ObamaCare repeal legislation.

The House has yet to pass a budget resolution because of tensions between the GOP leadership and the conservative House Freedom Caucus, which wants deeper cuts to mandatory spending than the pending budget draft calls for.

House conservatives also want tighter guidelines for tax reform after they felt burned by the evolution of the ObamaCare repeal legislation.

Another problem for lawmakers seeking quick action is the congressional schedule.

When lawmakers return, they will face deadlines to fund the government and raise the nation's debt ceiling by the end of the month. These discussions are likely to dominate the agenda in September.

Congress also faces an end-of-September deadline to finish work legislation to reauthorize the Children's Health Insurance Program (CHIP) - a program under the Finance panel's jurisdiction.

The panel is not expected to mark up tax legislation next month - and given the unfinished work on the debt ceiling and appropriations bills - it may be difficult to pass a budget by the end of September, as well.